Initiated a transaction on coinbase on Thursday (during the day). Still no coins in my account. Listed as 'Pending'. Ugh.

Yeah, mine took 4 business days to go through. Then two hours to send it to Seals with Clubs for the pokerz. We'll see how BTC works out.

The problem is that because of it's nature bitcoin seems to be a magnet for scammers. Hopefully that will improve as we get more mainstream adoption.

The problem is stopping scamming is expensive. I do hope that the openness will drive more competition and that will reduce the costs, compared to the alternatives. However, it's tough to beat the economy of scale in the market. I'm just shocked anyone even uses PayPal, though.

It definitely will. At first you can build like a 12 cent operation and people are anxious to trust you cause they love bitcoins so much. When there's a viable competitor, you have to invest a lot into it and maybe give your identity etc. to win market share. Scamming just isn't a profitable thing in a mature market.

Another evolution of the internet is probably a really good credit/reputation system. It's funny how bad credit rating is today.. you can do a bunch of shady things but if you pay your phone bill on time you're the man. So when that exists, people will always look for it and not trust anonymous people and everyone has incentive to maintain rep.

And in the way future, courts recognize bitcoins as actual things.

It's not really anything about bitcoins themselves that are a magnet, it's just the lack of supporting things, mostly just having to do with the newness of it all.

Tony from BitPay: Now over 2,000 merchants onboard, +500 since Wordpress announcement.

It was only in september that they announced 1,000 merchants. Growth rate accelerating fast. Amazing what a few hundred thousand in venture capital can do for a business with a good model run by competent people.

You are obviously neglecting the major benefit that Bitcoin has for scammers- its permanence of it's transactions. That obviously is a huge benefit against scammers on the paying end, of course. There will always be a trust issue in transactions, especially transactions that cannot immediately be verified on both ends. PayPal takes it one extreme measure, where the payer has infinite recourse and the seller has none. Western Union has the opposite, where once the money is sent, it's gone. As things mature, and you have bigger players, screwing individuals over becomes less of a good play, and you are correct that there are incentives to look at the bigger picture and incompetent people will be driven out faster. Scammers will still exist in other areas, and people will just need to understand the permanence of the transactions and be extra careful. I think society could benefit greatly from people being a bit more skeptical instead of all-trusting. Not sure how realistic that goal is. There was some study I read recently about how old people are actually mentally worse at determining shady behavior than the young. They just could not pick up on cues. The easier it is for them to give away assets without recourse, the more scams that will exist. This is not unique to Bitcoin, and certainly isn't a problem Bitcoin economies cannot solve (maybe your e-wallet only deals with verified individuals/companies who have some type of escrow when making payments, or warns you otherwise)? Or people who have individual information against them such that judiciaries could actually recover or make judgements against scammers/lock them up. The trouble is scammers that get caught typically already have gone through their assets, so there isn't much you can do about it.

I'm not neglecting it, it's just a fact of life that when you give someone something, they have it now.

Who has the perfect balance?

Ya, trust is impossible to totally solve, hence why you need a holistic/abstract solution, like market incentives, credit ratings, escrow services, etc. Specialization in consumer protection. Not perfect, but capable of being really close.

Non-permanent might seem like a good idea to crusty old people in a result-oriented way, but you're always just transferring the risk from one side to the other, it doesn't actually lower overall risk. It just makes it more one-sided and harder for the real solutions to develop.

While there might be a place for both reversible and irreversible payment, irreversible seems like a much better default. It is much more appropriate for the party that already has a reputation be the trusted one than every schlub customer who wanders in needing to be trusted or checked out.

'Stores' or 'companies' have built a reputation for doing something and it is really easy for this to be several orders of magnitude more valuable than any particular transaction.

The reason so many get scammed in the bitcoin arena imo is:

People are excited to try it out and aren't used to getting scammed so they aren't very careful.

A lot of bitcoin companies are new and there hasn't been a lot of time to weed out the incompetent and the scammers.

It's only in the lat few months that pre-bitcoin-era companies are jumping in. This will make the newer companies have to find ways to prove themselves or they'll get ignored. It used to be that 1000 posts on a forum was about the best credibility any bitcoin company offered.

I bet a great business for the right person would be to buy floundering or breakeven businesses and retool them to also accept bitcoin, even 5% more sales can make a big difference.

Not with escrow, of course (although the the escrow agent has it).

Obviously this is super situational and flexibility and openness will solve it in different ways for different problems. For minor transactions, even with an anonymous person with no reputation, it might be acceptable to take on the entire risk yourself. For major ones, even with major players, you might want to protect yourself. This costs money, of course, but it depends.

What ends up happening is trust should be something that "experts" who focus on trust take care of. Let specialization reign. Let competition reign. Non-permanent works very well in some cases, where neither party is especially trustworthy and there is no way to verify. Obviously you need a trustworthy arbitrator in this case, so it's just a more complicated form of escrow.


I agree. It just so happens that in a modern economy, you have fewer sellers than buyers. I don't think this is any kind of necessary requirement but it seems fairly obvious. Having someone vouch for those people who is trusted (and is accountable) would also be another solution. If you must rely on your reputation, it's very tough to get going, so being able to rely on the reputation of others could very well be something the market needs.


5% more in sales is extremely optimistic and unlikely, barring specialized grey-market businesses. But I like what they are doing now with making it a win-win. If a business can make just as much after fees/risk selling with Bitcoins and it's not much effort to accept it, they will of course accept this for even the smallest increase in sales. The free press could very well be worth it. I'm not sure it will drive a huge number of people to using Bitcoins, but it would certainly make it easier for more trade to occur and more people to accept payments in Bitcoin as needed. It's interesting, the payment processor for Bitcoins has a weird problem. If Bitcoin gets too popular, they will get cut out, since businesses can just deal with it themselves and avoid the fees. But if it's not popular enough, they don't make much. So it's going to be a hard long term play, unless I'm missing something.

I'm really glad a lot of the joke "businesses" are getting driven out as it will make way for people who know what they are doing to get involved. I hope it succeeds (or something like it).

I'm obviously a super n00b since i just figured this out, but .. dwolla only charges 25 cents on withdrawl??? What the heck am I missing???

I mean, coinbase charges 1% plus .15 and has a $100 cap. There's gotta be something here!

On top of that, people are charging like 10%+ for BTC to GDMP. With that I still need to put the money in PP and wait 2-3 days to transfer. With this it goes straight to my bank account -- with an extremely small fee!

Harder = more fees
Easy = less fees

Whats the deal?

Ya, if you give it to the escrow then the escrow has it.

You're conflating a transaction with the default specs of the payment system.

Ya, each transaction is unique and it depends. Which is why (I think) permanent is a better spec than reversible. It gives you the widest range for each transaction. (If you want it to be effectively reversible, that's when you use escrow.)

Why is non-permanent better in this case? Person A sends 50 sheckles to person B for 50 sheckles worth of whatever: If it's permanent, person A risks a value of 50 sheckles (multiplied by X trust level). If it's reversible, person B risks 50 sheckles (multiplied by X trust level).

Seems like you kind of make the case against it yourself. It's easier to escrow than arbitrate a payment that one side can reverse.

Dwolla doesn't sell bitcoins, so you need a MtGox account and to pay MtGox 0.5%. Also you have to wait a month after making your Dwolla account.

I am disappointed that Coinbase seems to take 4 days, maybe they'll get faster. I'm sure I heard them say they'd be increasing that limit. I didn't know about the 15 cent fee.

Yeah, I didn't mean 5% for any random business, maybe porn and other things that people might not want to trust their CC to.

The boost from news is probably a meaningful thing now, but it won't be latter when that's not news anymore.

The fees on Bitcoin payment processors are going to go towards zero pretty fast. I'd expect that the people who run them have enough coins that when bitcoin is popular enough to run them out of business they'll be pretty rich just from that. Also they can probably leverage their rep and experience into something else.

I think we just differed on what was meant by non-permanent. There are all kinds of levels of it. You have the most extreme example, where anyone just revokes payment. You have the next most extreme which is PayPal like, where the user pays a fee, but basically is believed any time it doesn't go through. Then you have a CC like dispute policy where the CC takes the hit, etc... CC is not true escrow, but it's very close to it. So pushing it to the other extreme is obviously a problem, but having some way to prove your case and get it reversed would be worth it.

I'm not sure it is the case where they get rich. How much business do you need to derive from Bitcoins to just cut the third party out of it? It can't be very much. You bascially need to recoup the costs of trading the coins, have a script for conversion rate, and you are done. And the effort to trade. And possibly some risk factor. If you are paying more than $100/month in fees, seems like it's easy enough to convert that over to doing it yourself. But maybe the processor just gets the rate down low enough where they match it, maybe pay a fixed fee and then a small % after that. It could be somewhat profitable. Obviously it will never hit zero due to trading fees and bank transfers and risk, but it certainly can stay very low. And since you centralize the work that doesn't need to get farmed out, you could charge a pretty low rate and doing it yourself would make no sense. Same reason why big companies still use external payrolls.

What I mean is that if they are guys that bought a lot below $1/coin then when there is such wide use that most companies are comfortable running their own solution the price will be like $50-$500/coin.

I'm sure they plan on making some money from the actual business, but spreading coin use to thousands then hundreds of thousands of companies will increase the value of their holdings by a lot.

It's not hard to cut third parties out, but businesses don't know that yet and it'll take a while. And it isn't as simple yet as it will be. In a year or two there will be a client that does something like this:

Download block headers (will take like 10 minutes)
Ask for a strong password and make as many encrypted keys as you want.
Get blocks backwards so you can immediately see and use any payments that come in.
Offer separate copies of full and watching only wallets to put up on an unsafe server.
More useful features I can't think of, accounting type stuff etc.

Maybe it'll cost something, but maybe not since people will be wary of non-open source stuff. So maybe it takes a bit longer. There is also the possibility of multiple programs working together, something open source that is the only program that gets access to your unencrypted keys and does the signing and another program with a ton of features that only does what can be done with knowledge of your public keys (crediting customers for payments, send bills, whatever).

AK - That makes sense. Speculate in the coins, then make them more valuable and make your money through the speculation.

I forgot about the problem of analyzing the block chain to get payments. It's a fairly solvable problem, but if you offer processing cheap enough, there's no reason for it.

re-quoted for lolz.

bitcoin seems on track for the standard 5-year adoption cycle. We're in year 3 and already gone through a few boom/bust cycles. Wordpress and the freedom of press from evil paypal is an unexpected novelty - expect most of the adoption to be in the grey/black markets like gambling. From there bits and pieces of the mainstream will nibble at it for solid growth.

For you guys betting sports with bitcoin, lucky you. BetIslands, one of the last US-facing offshore books just went bust holding a ton of player funds. Sure a bitcoin book could run with the cash (but why, if profitable to stay in business obv) - but you don't need to keep as much at risk on the sites with the ease of bitcoin xfers (hell, yank it out daily and re-send). The hassle of funding a BetIslands caused many guys to keep more on there than they would have liked. Sucks.

From what I read in the mid stakes sports thread here on 2p2, the biggest issue with a BTC sports book is "lol those things are not real money". Meanwhile people in the thread late pay and scam thousands of dollars from other members every now and then. There is also the huge bookkeeping hassle of tracking 20+ bets a week by hand. It's strange that with those negatives the sports betting poker community, a community not foreign to risk and EV, have not moved to a BTC sports betting site yet. /rant

some of us have.

I don't get what you think the advantage is of reversibility being built into the system. You don't lower risk when you do that, you just shift it to one side. And you make it so the controllers of the payment system have to resolve dispute rather than letting a market compete to do it well.

You can effectively have reversibility by using escrow. And then the totally safe transactions (which is probably most of them) have the option to not assume that cost.

Ya, there are less extreme versions of the Paypal model. But it's more costly. If Paypal actually attempted to sort out the dispute, I don't think it would exist. It's not a viable model.

seriously, ya. It's even more perfect for sports betting than for poker, cause a big player pool doesn't matter. And if you don't want to sweat exchange risk, you can digitally convert to USD on Mtgox and other exchanges. Kind of a no brainer imo.. even if you don't totally trust Mtgox, has to be safer than whatever sportsbook.

It's a matter of shifting is correct. It's an advantage in some things and a disadvantage in others. I don't see how this is hard to understand. At some root level, you have to have some level of finalness. But say even Bitcoin existing within a legal system, where you could sue someone who screwed you over, and you could argue it's not final even when the payments are made.

I also don't see where I said this problem couldn't be solved with things like escrow. Simply that escrow has costs, and that eats up a lot of the cost advantage a system like this would have. If PayPal is not a viable model, then it simply shows that transactions over long distances that cannot be instantly verified by both parties are probably a mistake. Or you have something like the credit card dispute system, which seems to exist, which is exactly like a less extreme version of Pay Pal that doesn't automatically side with the buyers, although very close to it, and has reasonable fees.

My main point is that Bitcoin naturally favors certain types of transactions (which is not any kind of judgement, just a description). The market could very well favor others, which of course would have to be built on top of it. The easier it is to get to a point where someone can get something without having any recourse, the more likely scammers will target that. Simple as that.

Maybe because it's not accurate. Example of when it's an advantage?

I didn't claim you said that. (It's true that you can't have both poisons. At least, it's wasteful. But I didn't call you on it.)

And obviously it has costs for a Paypal-like system to resolve disputes too. But I claim a market competing to do it will do it more cost-effectively than the Paypal-like company will so happen to do it.

Or that you should use an irreversible transfer system with 3rd party protection.

Just like you'd have to build a dispute resolution process onto Paypal-like system. Disputes don't get resolved magically just because you install it into the payment system.

It's not that "Bitcoin" favors that type of transaction, it's just that that type of transaction is inherently easier. (A system that didn't favor that type of transaction would be doing it wrong.)

Yes.

Just putting this separate since it's kind of a tangent and not important:
Apples and oranges. Credit card companies generate their profit extending credit to people. Paypal just transfers money around. They're different business models. Credit companies have room to spend on resolving dispute (or just taking the hit). I believe Paypal probably doesn't.

I could be wrong, I don't really know much of anything about Paypal, it just doesn't seem like there's a wide profit margin. And I doubt it would have such a sucky policy if someone could step in and be much better.